Page 22 – Arkansas Community Foundation

More than half of the country’s GDP is generated by the 5.5 million family-owned businesses in the United States. Profits aren’t the only priority for most family businesses; indeed, the vast majority of family business owners report that other factors, such as culture, community, charity, and values, are also important to the business. Although it is not surprising that philanthropy is a vital part of the family business fabric here in Arkansas, setting up the right structure to leave a legacy is not a cakewalk. As you advise a business-owner client, consider sharing questions that might help your client create or grow an effective corporate philanthropy program within the family enterprise.

Getting organized

Does the company have a strategy or system for prioritizing sponsorship requests, charity event invitations, and requests for donations? Is the strategy based on the owners’ values, along with employee input? What is the communication strategy for maintaining positive relations with the charities whose requests the company turns down? How are requests from employees handled? Could a corporate donor-advised fund at the Community Foundation help streamline administrative load? Is there a corporate foundation in place and if so could it be streamlined into a corporate donor-advised fund to save administration hassles and better leverage tax strategies?

Getting employees engaged

If the company has a community engagement program, how popular is it? For example, is there a matching gifts program and is that program being utilized as expected? Are employees eager to attend community events to sit at the company’s tables, or is it sometimes hard to fill seats? Are there opportunities for employees to volunteer together at local nonprofits? Has the company surveyed employees to learn about their favorite causes and the ways they prefer to give back (e.g., donate money, volunteer, serve on boards)?

Getting the word out

How is the company letting employees and other stakeholders know about its community commitments? Is it a priority to share civic engagement with the outside world, such as through a page on the company’s website, or is the company’s approach to stay under the radar? Do the employee handbook and recruiting materials describe community engagement opportunities for employees?

Related, and importantly, it is wise to remind your clients that the sale of a closely-held business creates strong opportunities for tax-savvy charitable giving–and that it is critical for the business owner to plan ahead.

Helping your clients ask the right questions can make a big difference in the success of their corporate giving programs. The team at Arkansas Community Foundation is here to help YOU help your client think through these important questions. We can help by setting up a corporate donor-advised fund, assisting with a matching gifts program, creating donor-advised funds for employees, collaborating on a philanthropic component of a business sale, and much, much more. Contact Ashley in Little Rock or Jody in Northwest Arkansas to get started.

Deborah and Steve Nipper of Magnolia use their deep roots and longstanding relationships to help define and model community leadership for good causes in south Arkansas.

“Community leadership is really about people who just want to help and find a way to solve problems. They are the helpers,” Deborah said. “Steve and I both have this desire. We like being part of solutions for Magnolia. And when we got married in 1996, we agreed that what one does, the other would do too, so we are a two-for-one deal,” Deborah said.

“I was born and raised here and then went to the University of Arkansas. I came back to Magnolia to work in banking. I know lots of business owners and local community leaders,” Steve said. “But Deborah taught Kindergarten in Magnolia for 37 years, so she is like a celebrity.”

Steve and Deborah have both held seats on the Columbia County Community Foundation board, as well as dozens of other local boards in the area. Between Rotary, their church outreach, a recent COVID hotline, a local food distribution program called the Stewpot and many other causes, the Nippers are often found volunteering and showing up to help.

But alongside the various organizations and causes they support, Steve credits the Community Foundation for showing him what he calls the “miracle of endowment.”

Deborah and Steve Nipper are strong supporters of the Magnolia Arts Center.

“Magnolia is a generous community. In 2006, the Columbia County Community Foundation Affiliate opened 40 family endowments from local donors,” Steve said.

“Those funds are still providing funds to local nonprofits 15 years after they were started. An endowment is one of the most lasting ways to help causes we care about.”

One of the couple’s passions is supporting the Magnolia Arts Center — where they can sometimes even be seen on stage for local productions. “We both love the arts and love what the Magnolia Arts Center is providing this community,” Steve said. “I helped the Center acquire the building. Once it had a physical presence downtown, the growth was phenomenal. You may not expect a town with a population of 11,500 to have a robust visual and performing arts scene, but Magnolia does.”

“This town provides great opportunities for everyone here to experience the arts. We strive for inclusivity. Magnolia Arts thrives with great volunteers like the Nippers, support from the Community Foundation, local businesses and donors, members, partnerships with Southern Arkansas University, and The Magnolia School District Performing Arts Department,” said Janet Rider-Babbitt, director for Magnolia Arts and the Columbia County Community Foundation affiliate executive director.

“Steve and Deborah are a huge part of why the Arts Center is successful, but they are part of something bigger for the town of Magnolia. They epitomize community leadership by setting an example, using their influence, and showing up when help is needed.”

Late last month, the White House released a proposed $1.75 trillion revenue package, putting to rest (at least for now) some of the uncertainty as to how sweeping tax reform could upend wealth planning strategies via changes to top marginal rates, a restructuring of the capital gains tax, and lower estate and gift tax exclusions, all of which have been heavily discussed and debated over the last several weeks. For now, those particular big changes appear to have been dropped.

Attorneys, accountants, and financial advisors who represent high-net worth clients are, however, keenly aware of how the just-proposed legislation still could pack a punch:

Where charitable giving is concerned, the proposed new surtax (modified from earlier versions) is not something that can be avoided or reduced through charitable deductions. That is because the proposed 5% surtax on taxpayers with more than $10 million in adjusted gross income is assessed on just that–adjusted gross income. Below-the-line deductions won’t help. Furthermore, an additional 3% surtax has been proposed for taxpayers with more than $25 million in AGI.
In addition, under this new proposal, pass-through entities, such as S corporations and partnerships, are still the subject of a 3.8% Net Investment Income Tax, as was the case under the prior version of the revenue package. Under the new proposal, this tax would be expanded to taxpayers with taxable income of $400,000 ($500,000 for joint filers) or more.
Of interest to advisors who represent businesses and business owners, under the proposed new law, a 15% “corporate minimum tax” would apply to “book income” of corporations earning profits greater than $1 billion. For your clients who’ve historically relied on income tax credits, this is an important provision to watch because income tax credits would not be as valuable as they are now.
Related, look out for a parallel increase to the global minimum tax rate, especially for corporate clients who have an eye on relocating headquarters to foreign countries. And under the new proposed laws, when a corporation buys back its own stock, it would be taxed like corporate dividends–plus a new 1% excise tax.
Finally, effective as of September 13, 2021 if the legislation is passed as written, high net-worth clients could be significantly impacted by the proposed limitation on “stock exclusions” under Internal Revenue Code Section 1202. For taxpayers with adjusted gross income of $400,000 or more, and for estates and trusts, only the 50% exclusion provision would remain. The 75% and the 100% exclusion would no longer be available.

Little Rock, Ark. (November, 2021) –Wayland Holyfield, the singer and songwriter of “Arkansas, You Run Deep in Me,” one of the Arkansas State Songs, donated the rights to the song to Arkansas Community Foundation.

“I want my song to continue to inspire Arkansans for years to come. Gifting the rights to Arkansas Community Foundation ensures the songs legacy, and will hopefully inspire Arkansans to appreciate our state, its generosity and the support of essential nonprofits,” said Holyfield. “I’m so pleased the Community Foundation has found a way to use my words and music in their efforts.”

The Community Foundation is producing a video using the song that portrays the many ways Arkansans and Arkansas nonprofits help each other build their communities. The video will be distributed during the Thanksgiving season to thank donors nonprofits and other Arkansas supporters.

The “Arkansas, You Run Deep in Me” Video Premiere is planned for 5 p.m. Nov. 18 at the Central Arkansas Library System Ron Robinson Theater in Little Rock. Holyfield will appear at the event, which is free to the public. Reservations can be made at Kbland@arcf.org.

“We’re rolling out the red carpet for the Mr. Holyfield, our donors and all those who work hard to build our state,” said Heather Larkin, President and CEO of Arkansas Community Foundation. “Wayland’s song sends the perfect message about our state’s beauty and culture. Mixed with beautiful footage of our state and its people working together for good, the video will be seen first on the big screen and the next day it will go online on multiple platforms.”

Arkansas Community Foundation, a nonprofit organization with over a half billion dollars in assets, fosters smart giving to improve communities. The Community Foundation offers tools to help Arkansans protect, grow and direct their charitable dollars as they learn more about community needs. By making grants and sharing knowledge, the Foundation supports existing charitable programs that work for Arkansas and partners to create initiatives that address unmet needs. Since 1976, the Community Foundation has provided more than $314 million in grants and partnered with thousands of Arkansans to help them improve our neighborhoods, our towns and our entire state. Contributions to Arkansas Community Foundation, its funds and any of its 29 affiliates are fully tax deductible.

Little Rock, Ark. (Nov. 11, 2020) – Jessica Szenher of Little Rock, Ark., is the latest recipient of the Lugean L. Chilcote Award, given by Arkansas Community Foundation Board of Directors to honor exceptional service to the organization. Szenher is the 23^rd recipient of the award, which was established in 1985 with Lugean L. Chilcote as the first recipient.

“This prestigious award honors those who have given exemplary service to the Foundation,” said Heather Larkin, president and CEO of the Community Foundation. “Jessica has been a dear friend, advocate and an enthusiastic champion of our Foundation’s mission for over 20 years.”

A native of Little Rock, Szenher is retiring in November after more than 40 years as a public relations and communications professional. She is past president and a long-time member of the Arkansas Chapter of Public Relations Society of America. The society awarded her the Crystal Award in 2000 for her significant and continuous contributions to the field of public relations.

After earning her bachelor’s degree in journalism and home economics from the University of Arkansas – Fayetteville, Szenher began her career as a reporter for the Texarkana Gazette. She moved back to Little Rock to work in corporate communications for Southwestern Bell Telephone Company. Szenher also worked in healthcare communications and for Little Rock marketing firm Stone Ward before founding her consulting business, Jessica Szenher Consulting.

An active member of First United Methodist Church, Szenher served on the Altar Guild, led the Confirmation and Member Care teams, was active in adult education and the food ministry, and served on various other church committees.

She and her husband Doug have two grown children, James and John Michael.

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Fayetteville, Ark. (Oct. 14, 2021) – Annetta Tirey of Bella Vista recently joined Arkansas Community Foundation as its Northwest Arkansas Program Officer. She leads grants and community leadership efforts and programs for the Foundation in the northwest region.

“Annetta’s long tenure with Tyson Foods in their corporate giving program and her successful leadership at the Northwest Arkansas Community College Foundation will be an asset to the Northwest Arkansas office as we expand our footprint there,” said Heather Larkin, President and CEO of Arkansas Community Foundation. “Her deep knowledge of the area’s unique opportunities and her extensive experience in the philanthropic sector make her a perfect fit.”

While leading the Northwest Arkansas Community College Foundation from 2016 to 2020, Tirey helped to expand NWACC’s presence in northwest Arkansas through the capital campaign to build a new center in Springdale. She provided strategic leadership and creative direction for all development activities at NWACC.

Tirey joins Jody Dilday, vice president of northwest operations in the Foundation’s Fayetteville office. Tirey and Dilday work to serve Benton, Carroll, Crawford, Sebastian and Washington counties. They provide donor services to existing fundholders, support for local nonprofits and the development of community leadership initiatives in the region. The Community Foundation also has a local affiliate office in NWA that makes local grants to the Fayetteville area, led by Stacy Keenan, executive director of Fayetteville Area Community Foundation.

A team member of Tyson Foods from 1994 to 2016, Tirey held several positions including director of Corporate Philanthropy and administrator of Charitable Giving Programs. She managed philanthropic and social responsibility strategies related to grants and charitable initiatives, team member giving and disaster relief programs for Tyson.

She received a Bachelor of Science in Communications degree from the University of Central Arkansas.

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Fall is in the air. Weekends are filled up with craft fairs, corn mazes, and calling the HOGS! In addition to these traditions, autumn is also a season for philanthropy.

Did you know that most nonprofits raise 50% or more of their annual revenue between Thanksgiving and December 31^st? This support is critical, as many agencies offer additional programs and supportive services for families throughout the holidays.

As a donor, the end of the year can be an important time for you as well. Here are few things to keep in mind as you prepare for the end of the year:

EXTENSION ON INCENTIVES IN THE CARES ACT

An increased adjusted gross income (AGI) deduction limit—For those who itemize, the AGI limit is increased from 60% to 100% for cash contributions to charities (excluding donor-advised funds and supporting organizations) made in 2021, with a 5-year carryforward for contributions that exceed 100% of AGI. For corporations, the limit on deductions for contributions, ordinarily 10 percent of AGI, is elevated to 25 percent for 2021.

A universal deduction of up to $300— Taxpayers who do not itemize can receive an “above-the-line” deduction for cash contributions made to charities (excluding donor-advised funds and supporting organizations) in the 2021 tax year. This is limited to each “tax-filing unit” so married couples who file jointly can only deduct $300. All taxpayers are eligible, even people who use the standard deduction. Make a gift directly to charities of choice, or help support an array of nonprofits through our Giving Tree Funds.

OTHER TAX-SMART STRATEGIES

Establish or ADD TO a Fund. Community Foundation funds provide a simple, efficient giving solution, allowing you the opportunity to take immediate action or create a long-term difference. The charitable gift deductions in the CARES Act exclude donor-advised funds, but donors can direct gifts through other types of Community Foundation funds (like a designated fund) for the maximum tax benefit. Learn more about Community Foundation fund options.

Donate an appreciated asset. Instead of selling an appreciated asset, you can receive a tax deduction based on the asset’s market value and avoid capital gains taxes. The gift can then be used to benefit the causes and organizations you care about most. Learn more about all the assets you can use for charitable giving.

Utilize an IRA Qualified Charitable Distribution (QCD) to make charitable donations. If you are age 70 ½ or older, you can use a QCD to direct up to $100,000 each year to qualified charities without treating the distribution as taxable income. Making a QCD allows itemizers and non-itemizers alike to donate in a tax efficient manner. This is particularly smart if you claim the standard deduction and would miss out on writing off charitable contributions. Learn more about IRA QCDs.

Stack multiple years of charitable contributions in one calendar year. In order to exceed the standard deduction in a given year, you can “bunch” donations to receive maximum tax benefits. And by using a Community Foundation charitable fund, your gifts are tax-deductible, the assets can be invested, and charitable dollars can grow tax-free. You can use those assets to provide ongoing support for your favorite nonprofits, even in the years you claim the standard deduction.

MAKE IT A TRADITION

Many families have made it a tradition to give thanks by giving back. We’d love to help you be thoughtful and intentional in teaching generosity to your children and grandchildren. Contact Ashley or Jody to learn more about our customized, generational giving services. We’re proud to be your partner in philanthropy!

Jim and Elgenia Ross of Monticello take their family’s charitable giving seriously, like, Robert’s Rules of Order seriously. Every year, the Ross family comes together to determine where their charitable gifts will go. Daughters Kim and Molly, both of whom live out of state now, along with their children Kyler (12) and Sadie (17), join Jim and Elgenia to have an official meeting, this last year by Zoom. The family takes turns taking minutes and votes on their favorite charities. “We start with Arkansas-based charities,” said Jim, “And then the next level of focus is in Drew County. We like to give local.”

Jim is a longtime supporter of Arkansas Community Foundation. As a retired attorney, he has referred many of his clients to the Foundation and is the former Chair of the Community Foundation’s Board of Directors. “When I was the chairman of the Foundation’s Board, I heard a story about one family that had three generations of giving. This inspired me. I wanted our impact to be perpetual, so we opened a fund and our family began an annual tradition of coming together to choose our favorite Arkansas nonprofits to support. This is something we all look forward to,” said Jim.

Elgenia is originally from North Carolina but calls Arkansas home. “Arkansas is the perfect size for what we want to do. The state is small enough to know more about what is going on. When we make donations to local organizations, we can see the impact more directly. The Community Foundation makes giving more personal,” said Elgenia.

Elgenia and Jim Ross with their granddaughter

“We all like to do a little research before the family gets together. We share that responsibility,” said Kim Ross, one of Jim and Elgenia’s daughters. “But I think an unexpected benefit of doing this together every year is that it keeps our family connected. I live out of state and so does my sister. Choosing Arkansas nonprofits to support has kept us familiar with what is going on ‘back home’ and keeps us connected to each other in a unique way. For my parents to start this fund and ensure such a meaningful legacy means a lot to me, and hopefully to my son, Kyler.”

Kyler likes to hand-deliver the check to the nonprofits he supports. In June of 2021, he took a check to the Nature Conservancy, one of his nonprofit choices for the year. “It was pretty cool,” said Kyler.

According to the Foundation’s Chief Development Officer, Ashley Coldiron, Jim should probably be on the Community Foundation’s payroll. “Jim has referred so many clients to us that I’ve lost count. And the ripple effect of his referrals continues making an impact for so many Arkansas nonprofits,” said Coldiron.

“What the Foundation does is great for sustaining legacies. One of my favorite stories is about P. Luevonda Ross and how we’ve ensured her hard work and impact are remembered. A friend of our family and local schoolteacher, Sarah Blackmon, came to me years ago and told me about one of her former students, Luevonda. Luevonda worked hard, became a well-respected attorney and was elected circuit judge for the 10^th judicial district,” said Jim. “But she died from cancer just weeks before she took office. We established a scholarship in her name and years later, her nephew, Quincey Ross, took her place on the bench. We are so proud of her legacy.”

Jim continues to refer former clients, friends and whoever may need guidance about giving to the Community Foundation. According to Jim, “The Community Foundation is an easy sell.”

Arkansas Community Foundation is honored to work with you and your clients to structure charitable giving plans and establish funds that achieve both your clients’ charitable objectives as well as address our region’s greatest needs.

Our team at the Community Foundation intimately understands the issues facing our community and how grants from funds can be impactful. We do this through deep knowledge of Arkansas’ nonprofits, due diligence to ensure that each charitable dollar helps as many people as possible, and an unwavering commitment to investing in our community for the long term.

As we enter into an era of potential tax reform, we pledge to keep you informed of legislative developments that will require you and other advisors to navigate the important distinctions between Community Foundation donor-advised funds and commercial donor-advised funds, as well as the differences between donor-advised funds and private foundations.

No matter what legislation is passed and when, the Community Foundation team is here to educate you and your clients. We’ll also keep you posted on charitable giving options that are tax reform-neutral and suggest ways to leverage pre-legislation windows of opportunity. Please reach out with any questions you’d like to be sure we address in our advisor communications.

With charitable bequests on the rise, and the possibility that more clients will be subject to Federal estate taxes in the future, many attorneys, accountants, and financial advisors are refreshing their recollections on the requirements of advising and administering taxable estates where one or more charitable organizations is a beneficiary.

Advisors’ fiduciary responsibilities to charitable beneficiaries are similar to fiduciary responsibilities to a decedent’s family members and other individual beneficiaries. Where a charity is a residuary beneficiary, for example, a fiduciary must pay careful attention to expenses and liabilities that impact the amount the charity ultimately receives. These liabilities and expenses include taxes, debts, fees, and costs incurred by the executor or trustee. A fiduciary should expect charity remainder beneficiaries to pay as much attention to the bottom line as family members.

Not only must a fiduciary watch expenses to maximize the remainder beneficiaries’ interests, but a fiduciary must also be careful to avoid making distributions too early and therefore potentially becoming personally liable if estate obligations surface later. This was the unfortunate situation in Estate of Lee, T.C. Memo. 2021-92, where the fiduciary ultimately was found by the Tax Court to be personally liable for amounts due under a Federal tax lien.

As you assist your clients with estate planning that involves charitable giving, consider encouraging your client to talk with the charitable organization about the intended bequest so that expectations are well-documented, even if the bequest likely will not materialize until well into the future. Remember, too, that some charitable clients can benefit from establishing a fund at the Community Foundation to receive and administer their bequests to charitable causes. In that case our team at the Community Foundation can assist as you structure a bequest in the client’s estate plan.

Finally, and critically, ensure that the legal documents or beneficiary designation forms reflect the correct name of the charity. There are more than 1.5 million charitable organizations in the United States, and many have similar names. Arkansas Community Foundation maintains a directory of Arkansas Nonprofits on our website here. If you have any questions about which charity your client intends to benefit, ask both the client and the charity to confirm the exact name and location of the organization.